From the upper crust Pureblood, to the bourgeoisie Half-Blood, through the working class Muggle-Born, and on down to the barely acknowledge Half-Breeds, outcast Squibs, beings with near-human intelligence and House Elf slave labor, no amount of skill, charm, or popularity will change how a being is viewed within wizard society. While we see Harry, Ron, and Hermione, their peers see Pureblood (or Half-Blood to the extremists), Pureblood, Muggle-Born.

The Ministry of Magic would more accurately be called the Ministry of WATCHING ALWAYS WATCHING. From the banks (via bureaucracy in the Goblin Liaison Office) to the schools to law enforcement and journalism, the Ministry controls every aspect of wizarding life in obvious and subtle ways. With no free press or free market, wizards and witches have to trust their benevolent ministry is playing fair.

Who votes in the Minister of Magic? How is the governing body of the wizarding world decided? Why are there no term limits? Is there a bureaucratic sorting hat somewhere? Is the entire legislative body beholden to a sentient piece of ancient headgear? Listen, that's no basis for a system of government!

Hogwart's curriculum requires five years of Potions and Herbology but does not offer a single economics, math, science, or civics class, leaving graduates woefully unprepared for most professions not conveniently doled out to them during government-sponsored testing. This keeps the community insular, with no way for young people to escape into Muggle society.

Wizard children have a very small pool of careers to aspire to when playing make-believe. Lucrative jobs seem disproportionately government-controlled: Auror, law enforcement, journalist, professor, bureaucrat. Most of those will go to Purebloods and favored Half-Bloods, leaving the rest to drudge along as bus/train drivers, shopkeeps, healers, or janitorial duty. The main exceptions, like Muggle society, are those who become celebrities, either actor or Quidditch star.

Despite being both a Pureblood and possessing what should be a well-paying job as the head of the Misuse of Muggle Artifacts Office, Arthur Weasley's family struggles to make ends meet. One could argue that having seven children would be a strain on even the most robust salary, but having a strong, outspoken stance on equality and a friendly disposition toward Muggles was obviously affecting Mr. Weasley's yearly review.

Not that the Weasley income should actually matter that much. In a culture where everyday goods and services are magicked into existence or the result of slave labor, a functioning economy is virtually nonexistent. Sure they have bank vaults full of gold and fancy coins to pay for school supplies and Butterbeer to keep the masses busy, but unless they're investing in the Muggle market, they might as well be paying with Monopoly money.

In the office of professor McGonagall, a magical quill writes down the name of every wizard and witch when they're born. Since the school is beholden to the Ministry of Magic, the government has a record of every member of the population from the moment of birth, regardless of location or ancestry. All the better to coerce wayward members back into the fold send out Hogwarts acceptance letters.

From outright fear of Muggles and their foreign technology to the more benign treatment of them as exotic others, the self-imposed seclusion has bred centuries of misinformation both large and small. Even those friendly toward Muggles have a healthy distrust of them as a whole; the old, "Oh well you're not like the rest of them. You're like us!" chestnut.

What prison system in their right mind actively antagonizes dangerous criminals and attempts to torture them to the point of insanity? Dementors, executioners with a mysteriously vague chain of command, do nothing but cause their charges to live in a literal hell, supposedly for committing grievous crimes. However, plenty of people have used curses that should have ended them in Azkaban but didn't. So wizards implicitly understand it's a place to send people that have crossed the government without trial.

All of this culminates in a totalitarian society that uses coercion, ignorance, brainwashing, misinformation, isolation, and reconditioning to provoke a sense of community and national pride. Basically, they're North Korea with wands.